A $1.25 billion infusion from the federal government to help Maine respond to the COVID-19 pandemic may not go as far as lawmakers and the public would like, the state’s top financial officials told lawmakers Friday.

Finance Commissioner Kirsten Figueroa said as much as $220 million of the funding could go to K-12 public schools to help them prepare for reopening in the fall with strict physical distancing measures, based on recommendations from the federal Centers for Disease Control and Prevention. Some of the funding also may go to rebuild parts of the state’s public health system that had been reduced under the previous governor, she said.

Administrative and Financial Services Commissioner Kirsten Figueroa said as much as $220 million in federal aid could go to Maine’s public schools. Joe Phelan/Kennebec Journal

“I’m not really calling them initiatives, we were calling them general thoughts on things that are going to have to have some money attached to them if we are going to make the changes necessary to be in this post-COVID world,” Figueroa said at a briefing for the Appropriations and Financial Affairs Committee.

But some committee members pressed for part of the funding to be used to reimburse businesses for COVID-19 related costs.

Rep. Teresa Pierce, D-Falmouth, asked Figueroa if the administration had considered using the funds to pay restaurants in Androscoggin, Cumberland and York counties for their recent losses after a restriction on in-house dining was extended indefinitely this week.

The restaurants, like those in the state’s other 13 counties, had been preparing to offer dine-in service Monday, but Gov. Janet Mills delayed the reopening because of rising numbers of new cases and hospitalizations in those counties.

Pierce said she respected Mills’ decision to change the opening date for restaurants in those counties in her efforts to protect public health, but the restaurants in question purchased supplies, including perishable food items, that they would not be able to sell.

“So they incurred some costs, which I think, are directly related to COVID-19,” Pierce said. “Is there a way that businesses that were affected that way can quickly get that information to the state so they can be reimbursed for that?”

Figueroa said the state is working on a streamlined application process for entities that have been affected but it is not ready yet. She said other states that are beginning to disburse federal funds have created complex grant applications that could be 30 to 40 pages long.

“I think we need to do something that is a little less paper-pushy than that,” she said. For now, Figueroa said people should simply send requests to Mills’ office.

Mills has yet to spend any of the money, but she has been under increasing pressure from both lawmakers and municipal officials to begin releasing the federal funding that was sent to Maine as part of the federal CARES Act.

Figueroa said the federal aid, which must be spent by the end of December, can only be used for COVID-19 related expenses and not to back-fill revenue lost because of the pandemic. She said the administration also was waiting to see what additional stimulus funding the federal government will provide and whether Congress will amend the CARES Act to extend the deadline for expenditures and offer more flexibility in how the money can be used.

Some lawmakers said the Legislature should be called back into session, because it should be involved in making decisions that affect state spending and getting the funding allocated quickly to qualified recipients.

“There were very meaningful amounts of federal stimulus money that was appropriated on an emergency basis,” said Rep. Drew Gattine, D-Westbrook, the House chairman of the committee. “Trying to figure out the pathway to resolve how we are going to use that money … I think that needs to be resolved quickly.”

Others pointed out that the full Legislature will have to be in session to approve any actions recommended by the committee.

“Ultimately, and probably rather soon, the Legislature as a whole will have to be called into session because some of these things, I don’t believe can be worked out simply by the committee working with the administration and the chief executive to resolve and get this money out there to the public,” Rep. Dennis Keschl, R-Belgrade, said. “We need to do that quickly, I get that, and I want to do that, but I don’t think we can just bypass the full Legislature.”

Figueroa and Mike Allen, the associate commissioner of Maine Revenue Services and the director of econometric research for the agency, also briefed lawmakers on incoming state tax revenues, which have tapered with a slowing economy, and the impact that would have on the state’s $8 billion, two-year budget.

“Obviously there is a worldwide fiscal impact as a result of COVID-19,” Figueroa said. But she said state government was on solid financial ground, “when COVID came to town.”

Figueroa reiterated the state had yet to transfer funds from its $253 million budget stabilization or “rainy day” account despite claims by some of Mills’ critics that she had spent all of the state’s savings.

Lawmakers also left a budget surplus of $193 million when they adjourned, funds that will likely be needed to check the downturn in revenues from income and sales tax receipts in 2020.

She said that while some national financial research firms have estimated the state could face a revenue shortfall as large as $1.2 billion in 2021, the models they used did not fully account for the details of Maine’s economy, and that the state’s own models project a worst-case shortfall of $525 million.

Both Allen and Figueroa also noted that as the state begins to reopen its economy, it looks now like April will be the worst month for revenue loss this year.

The committee is expected to meet again next week as it begins to discuss specific proposals on using the federal funds and managing the state’s budget.

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